Basics

What is a Bitcoin ATM? Here’s all that you need to know

When compared with traditional cash dispensing units, Bitcoin ATMs differ quite substantially.

Any industry that witnesses a financial boom, more often than not, ends up facilitating the creation of hundreds of ancillary businesses and products. The crypto sector is no different such that after the 2017 bull run which saw many digital currencies scale up to their all-time high values, a number of fully-functional Bitcoin ATMs started to spring up all over the world. 

In this regard, as the name seems to quite clearly allude to, a Bitcoin ATM (Automated Teller Machine) is a vending kiosk that enables crypto holders to directly purchase BTC using cash or a credit/debit card. Not only that, a large number of machines in existence today feature a ‘bi-directional module’, which allows individuals to facilitate a sale of BTC in exchange for their local fiat currency as well.

How do Bitcoin ATMs work?

In terms of their design outlay, most Bitcoin ATMs feature a monitor, QR scanner, bill acceptor, and a dispensing unit. Similarly, on the backend side of things, the above-stated hardware components are linked with one another using a sophisticated software setup that ensures each and every transaction (tx) is facilitated in a quick, easy, and secure fashion.

When compared with traditional cash dispensing units, Bitcoin ATMs differ quite substantially since they are not linked with a centralized financial institution. Instead, these machines interface directly with their associated cryptocurrency exchange via a secure internet connection, thereby enabling users to facilitate crypto-to-fiat transactions (and vice-versa) in real-time. 

Though each machine may have its set of unique differences, the process of buying and selling crypto across all of these devices is pretty much the same. For starters, users are required to scan the QR code of their wallet to initiate the tx, following which they may or may not have to provide some sort of legally verifiable ID, depending on the jurisdiction they are in. Once this is done, the amount one BTC wishes to purchase needs to be inputted along with the fiat associated with the particular transaction. The aforementioned process is quite straightforward and within a matter of minutes users should receive a ‘transaction confirmation’ in their wallets.

A few technicalities related to Bitcoin ATMs

Transactions facilitated via Bitcoin ATM’s result in an individual’s freshly purchased crypto either being transferred directly to the buyer’s personal Bitcoin soft/hard wallet or to a paper wallet that is automatically issued at the time of purchase. 

Another facet of these machines worth bearing in mind is that they retrieve live BTC rates in realtime from the internet. However, as part of each transaction, an additional percentage fee is charged by the ATM, which is usually factored into the price of the currency automatically. To be a bit more specific, most Bitcoin ATMs charge an 8% fee for buying BTC and a 5% fee for selling crypto-for-cash. However, this figure can vary from machine to machine by a small amount.

Key takeaways worth bearing in mind

  • While most Bitcoin ATMs allow individuals to buy as well as sell their crypto assets, there are some machines that only allow users to facilitate BTC purchases.
  • As of last year, there are nearly 9,000 Bitcoin ATMs located across the globe. 
  • Bitcoin ATMs are linked to a cryptocurrency exchange via a secure internet connection, thus enabling them to obtain conversion rates in real-time.
  • Most Bitcoin ATMs charge a fiat-to-crypto tx fee ranging between 8%-9% and a crypto-to-fiat fee of around 5%.
Previous

What is the Dark Web?

Back to Basics
Next

What are Nodes? Everything you need to know about the crypto term